MICHAEL ZAHARIEV: Resale democratises luxury for Africans

Demand for luxury goods in Africa is on the rise, with the market valued at $5.74bn and expected to expand annually by 1.32% to 2028. Despite this potential, the limited physical presence of global designer brands on the continent and prohibitive cost of luxury items have created challenges for African consumers. But with the boom in luxury resale, access to designer pieces is now in reach.

There is no shortage of demand on the part of African consumers for aspirational luxury brands such as Louis Vuitton, Gucci, Prada, Burberry and Christian Louboutin. As wealth increases so does the desire to display it. With traditional aspirational assets such as cars and houses becoming more difficult to afford, the desire is often expressed through purchases of high-end sneakers and other goods perceived as “luxury”. However, these items have been physically inaccessible for the majority, and are still financially out of reach for some.

That is where the resale of luxury goods is bridging the gap, making it possible for people to buy authentic designer pieces at a fraction of the retail price, averaging a 40% discount on items in excellent to new condition. Besides the lower prices, consumers can also benefit from interest-free payment plans not offered when buying new. For example, half our customers opt to pay off their purchases over two months.

However, there are still far fewer resellers in Africa than anywhere else, which I believe is due to a lack of trust among consumers as a result of  high volumes of counterfeit goods, scams and crime. Nevertheless, trust is slowly being built. Initially, this was achieved by establishing physical stores in premium locations that provided greater customer comfort than shopping for pre-owned items online.

Mobile-first market

Increasing trust has meant geographical constraints are no longer as much of a barrier, with resellers catering to the continent’s tech-savvy consumers. They comprise 570-million internet users and the number is climbing, thanks to the proliferation of smartphones and mobile devices.  About 287-million Africans now go online in this way. That has prompted the growth of online shopping, with mobile commerce — which accounts for 84% of our traffic — dominating the space and leapfrogging traditional e-commerce, where transactions typically take place on desktop computers.

Not only are resellers tapping African consumers’ preference for mobile commerce, they are also meeting them where they are, with WhatsApp being the most popular messenger app. With its low data consumption, strong security features, multimedia messaging capabilities and real-time conversations, WhatsApp is becoming an increasingly popular platform for Africans to transact on.

WhatsApp eliminates the need for shoppers to download additional apps or leave the channel to make their purchases, making it easier for them to engage and do business with resellers in an environment they already know and trust. At the same time, it provides luxury resellers with an efficient way of reaching consumers at scale across the continent.

Through WhatsApp’s application programming interface, which essentially allows two applications to talk to each other, resellers can also create luxury experiences for customers whereby they can chat with what feels like their own private assistant who is to serve them at any time. I don’t foresee consumers’ preference for WhatsApp changing; in our experience people tend to stick with what they know unless they have a good reason not to.

Payment options

The provision of a variety of digital payment options also contributes to the democratisation of access to luxury items. While cash is still king in most parts of the continent, e-payment methods such as cards, mobile wallets and electronic transfers are gaining momentum and reducing friction in domestic and cross-border payments.

In addition, buy-now-pay-later payment plans are experiencing robust growth in Africa, particularly in nations with flourishing e-commerce, elevated inflation rates and inefficient banking systems. By empowering consumers to distribute their spending across several interest-free instalments, buy-now-pay-later plans help to foster greater consumer inclusivity in terms of how individuals earn and spend. For instance, Africans who receive weekly wages are now able to make purchases that would have previously been a challenge to afford.

Over the past three years, luxury has outperformed other spheres within the fashion retail sector. Consequently, many African malls are now trying to reposition themselves to attract more luxury or high-end brands. And while more international designer labels are gaining a physical presence within the African market, there are still a number of notable ones missing, such as Hermès, Chanel and Dior.

In making luxury more accessible, resellers have had to adapt their approach to the specific needs and preferences of the continent’s consumers. This has contributed significantly to the success of the pre-owned concept in Africa, while also enabling the growth of a more inclusive and accessible luxury market. I believe this has laid the foundation for the resale model to grow on the continent and expand its applicability to beyond the realm of luxury.

With its proven ability to cater to the diverse needs of African consumers and its capacity to make premium products more attainable, the resale market is ripe for exponential growth and is poised to reshape the African retail landscape in coming years.

• Zahariev is cofounder of Luxity.